Wedgewood Square Ctr. Ltd. P'ship v. Stewart Title Guar. Co.

• Decision Date: 30 June 2011
• Docket Number: No. SD 30899.,SD 30899.
• Citation: 347 S.W.3d 582
• Parties: WEDGEWOOD SQUARE CENTER LIMITED PARTNERSHIP, a Limited Partnership, Appellant,v.STEWART TITLE GUARANTY COMPANY, Respondent.
• Court: Missouri Court of Appeals

347 S.W.3d 582

WEDGEWOOD SQUARE CENTER LIMITED PARTNERSHIP, a Limited Partnership, Appellant,

v.STEWART TITLE GUARANTY COMPANY, Respondent.

No. SD 30899.

Missouri Court of Appeals, Southern District, Division Two.

June 30, 2011.Motion for Rehearing and Reconsideration and

Transfer to Supreme Court Denied

July 20, 2011.

Application for Transfer Denied

Oct. 4, 2011.

Steven E. Marsh, Springfield, MO, for Appellant.James R. Fossard, Springfield, MO, for Respondent.WILLIAM W. FRANCIS, Jr., Judge.

Wedgewood Square Center Limited Partnership (“Wedgewood”) appeals the trial court's judgment denying its claim for damages against Stewart Title Guaranty Company (“Stewart”). Finding no merit to Wedgewood's points, we affirm the judgment of the trial court.

Factual and Procedural History

On November 17, 1997, Stewart issued a title insurance policy to Wedgewood—Policy Serial No. CNJP–1597–459557 (“the Elko Policy”)—as to one real estate parcel in Elko County, Nevada (the “Elko County property”), and on November 18, 1997, issued a second title insurance policy to Wedgewood—Policy Serial No. CNJP–1597–459558 (“the White Pine Policy”)—as to four real estate parcels in White Pine County, Nevada (the “White Pine County property”). These were lender policies which, inter alia, insured against loss or damage by reason of “[a]ny defect in or lien or encumbrance on the title[ ]” as to all five real estate parcels, which secured one promissory note in the principal amount of $347,722.40. The deeds of trust to these properties were executed by Lee and Barbara Reierson (Wedgewood's mortgagors) in favor of Wedgewood, to secure payment of the $347,722.40, as part of a multi-parcel real estate transaction.

In 1999, after the Reiersons defaulted on the Wedgewood loan, Wedgewood asked Stewart to prepare a foreclosure report. On March 15, 1999, Stewart issued a “Preliminary Title Report” (“Report”) on the White Pine County property only. Included in the Report, was a $30,000 deed of trust (the “Allison deed of trust”) executed by the Reiersons in favor of Thomas G. Allison, the Reiersons' broker on the White Pine County property. This deed of trust purported to have priority over Wedgewood's deed of trust because it was recorded immediately prior to Wedgewood's deed of trust. However, it is unclear from the record presented to us the precise explanation of how the Allison deed of trust was recorded first. That determination is unnecessary for our decision.

On May 17, 2000, Wedgewood filed suit against Stewart and one other defendant, alleging various problems with the underlying real estate transaction. Wedgewood's amended petitions added two additional defendants and included a title policy claim against Stewart asserting that Wedgewood's deed of trust upon the White Pine County property was impaired by the Allison deed of trust. After Stewart and the other three defendants each filed an amended motion for summary judgment, the trial court entered summary judgments in favor of each defendant and against Wedgewood. In its judgment, the trial court found the claim against Stewart was premature because Wedgewood had never foreclosed on the mortgage and, thus, Wedgewood's damages had not been liquidated and determined.

On appeal, only the title policy claim against Stewart was reversed and remanded for further proceedings; Wedgewood's other claims of error were denied. See Wedgewood v. Lincoln Land Title Co., Inc., 217 S.W.3d 308 (Mo.App. S.D.2007). This Court reversed and remanded the title policy claim because the trial court had based its grant of summary judgment on the premature filing of the claim, and it noted that “filing a suit prematurely should not prevent a plaintiff from proceeding with an action when it becomes ripe.” Id. at 311.

In 2006, at the request of Wedgewood, Carroll Gagnier, the owner of Nevada Trust Deed Services, began the process of foreclosing on Wedgewood's deed of trust on the White Pine County property only. Stewart had requested Wedgewood foreclose on the White Pine County property in order to ascertain Wedgewood's damages under the White Pine Policy.

On July 11, 2006, Wedgewood and the Reiersons negotiated a settlement without input or consent from Stewart. At the direction of Wedgewood, Mr. Gagnier stopped the foreclosure and prepared a release of the deed of trust, which was then recorded. The Reiersons paid $375,000 to Wedgewood for a “Full Reconveyance” of the White Pine County property. Wedgewood admitted it released its lien in the settlement with the Reiersons. Wedgewood also gave the Reiersons a full and complete release of any and all claims.

On May 3, 2007, Wedgewood filed a third amended petition against Stewart claiming damages as a result of the Allison deed of trust on the White Pine County property. Wedgewood claimed its secured interest in the White Pine County property had been impaired by the Allison deed of trust which, contrary to specific written instructions, had been recorded by Stewart prior to the Wedgewood deed of trust. It alleged that although Wedgewood had made a claim and demand for Stewart to correct the problem or compensate Wedgewood, Stewart failed to take any action to address the claim or correct the apparent priority of the Allison deed of trust over the Wedgewood deed of trust. Wedgewood asserted “[a]s a result of its foreclosure and collection proceedings, [Wedgewood] recovered the sum of $375,000.00 on the debt to [Wedgewood], resulting in a deficiency of at least $48,027.42[,]” and claimed damages in an amount of at least $48,027.42. Stewart responded that Wedgewood had no claim under the White Pine Policy because it did not liquidate its damages by foreclosing on its interest in the White Pine County property and, in fact, released its deed of trust to the White Pine County property by a “Full Reconveyance” dated July 11, 2006, filed and recorded in the White Pine County Recorder's Office on July 20, 2006. A Full Reconveyance in the State of Nevada is a release of a deed of trust.

Robert Wines, an attorney in Nevada who represented the Reiersons, testified by deposition and stated that the Reiersons insisted on a full release, which was given, and a release of the deed of trust as a condition for the payment to Wedgewood of the sum of $375,000.

At the bench trial, Bradley L. Farney, claims counsel for Stewart, testified Stewart never received notice of a claim arising from the Allison deed of trust. He explained that only after Wedgewood filed its suit against Stewart did Stewart instruct Wedgewood to “define, ascertain, [or] liquidate” its damages caused by the Allison deed of trust. Mr. Farney also testified that if Wedgewood released its lien, or settled without written consent of Stewart, the coverage was terminated under the terms of the White Pine Policy.

Mr. Farney testified that in settling with the Reiersons, and releasing its interest in the White Pine County property, Wedgewood stripped Stewart of its rights to subrogation.

David Denton, a general partner of Wedgewood, testified that in 1999, he called Stewart and requested Stewart remove the Allison lien. Mr. Denton made the decision to settle with the Reiersons for $375,000. When asked why he accepted less than the amount owed on the White Pine County property, Mr. Denton responded:

Mr. Reierson had offered $200,000 in order to get us to release the deeds of trust a month or so after we filed foreclosure notice and that eventually got up to $375,000 which was supposedly the last dollars he had, and the money was coming from the sale of one of the properties. It just seemed to us being not familiar with Nevada, that it was close enough that we would not take the risk of having a bigger problem had we ended up foreclosing on the property.

Mr. Denton felt it was in the best interest of everyone involved to get the money while he could. His explanation for accepting less than the amount owed did not mention an encumbrance resulting from the Allison deed of trust.

The trial court ruled in favor of Stewart on Wedgewood's claim. Stewart requested specific findings of fact and conclusions of law. The trial court found, in part, that Wedgewood did not sell the White Pine County property at a foreclosure sale, Wedgewood released its deed of trust on the White Pine County property by a Full Reconveyance and as a condition of the $375,000 payment received, and that Wedgewood did not file a notice of claim or a proof of loss with Stewart. This appeal followed.

Wedgewood's initial point appears to allege error in the trial court's judgment in that the White Pine Policy covered any impairment resulting from the Allison deed of trust and required Stewart to take affirmative action to correct, remove, or resolve that defect.¹ Wedgewood's final two points relied on allege the trial court erred in entering judgment in favor of Stewart because: (1) Stewart should have been ordered to pay the foreclosure expenses; and (2) Stewart should have been ordered to pay for vexatious refusal to pay, pursuant to section 375.296 ² and/or section 375.420. The primary issue for our determination is whether substantial evidence supported the trial court's decision that Wedgewood failed to show it was entitled to damages under the terms of the White Pine Policy. Because resolution of Wedgewood's first point renders its last two points moot, no further discussion of points II and III is required.

Standard of Review

In a court-tried case, appellate review is governed by Rule 84.13(d) and the principles articulated in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).³ Accordingly, the judgment must be affirmed unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Dennis v. Henley, 314 S.W.3d 786, 787 (Mo.App. S.D.2010).

Analysis

Wedgewood's brief claims Stewart was in breach of the White Pine Policy because it had a duty to take...